Financial Homework For First Time Home Owners

Are you a first time potential home buyer? If so, you’re coming into the market at the right time. There are lots of homes on the market, and so many of them are enticing. You need to do your financial homework before you start looking, though, so that, when you’re ready, you can enjoy looking through all the houses you’ll see, knowing that soon, one of them will be yours.

First, get an understanding of how mortgage works versus renting. With mortgage, falling behind even one payment can affect your credit rating, and make the banks worry about your long term ability to pay them. You also need to know if your state demands escrow be added to your monthly payment. You need to know what the property tax rates are where the homes are that you’ll be looking at, and you need to know if the particular community or town your house might reside in has extra community fees.

Second, you need to make sure you have enough money for your down payment.

If not, there are always options you might be able to use, such as having the person you purchase the house from fronting them to you, or borrowing money to cover it. However, it’s best if you have a certain amount saved that potential creditors might be able to see.

Next, don’t just go with the first lender you talk to. Make sure to talk to a few lenders to see who’s going to offer you the best deal. Deals, as they pertain to purchasing a house, usually concern what kind of interest rate you can get. Also, you need to know that interest rates can change quickly, so one week your rate could be higher than the previous week when you talked to a lender.

Here’s a reality check; you don’t know it all. That doesn’t mean you have to always act from a position of not knowing what’s going on.

You’re allowed to ask questions, as many questions as you want to, over and over again. Make sure you avail yourself of any information you can find, and all sources that will give you the information you need to make informed choices.

Work on finding a real estate agent that you can communicate with, one who you feel has your best interests at heart. A good real estate agent will inspect houses that you may be interested in before you do; looking to make sure the homes are in good condition and looking out for your well being. A good agent will guide you to the best properties, not only the ones that will give them the best profit. They will make sure not to insult you by taking you to homes that aren’t up to standard, and they also won’t insult your ability to pay for a home. It will require that you’re as honest with them as you can be in what you can afford; some people feel shame at not being able to afford homes that are easily out of their range.

The final thing to know about is the ,000 tax credit from the federal government. Right now, it’s available for first time home buyers from January 1st to December 1st of 2009; there are also a tax break program in 2008, and potentially one coming up in 2010. There’s even a movement to increase the amount of the tax break to at least ,000 at some point, and some states are adding additional tax credits to help stimulate their housing issues. Be sure to verify whether or not your income level qualifies you for one of these tax breaks.

Doing your financial homework will make buying your first home a pleasure, and something to look forward to.

Tags: , , , , ,